Eugène Delacroix. “La Liberté guidant le peuple” (1830)
United, we stand. Maximalist brainworms seem inevitable in a tribalistic society like ours, but standing strong together ensures we all succeed.
I idolized this picture growing up –– imperialist colonizers excel at “we’re responsible for elevating worldwide democracy and human rights” propaganda ~ Isn’t it funny how based maidens always lead the charge towards liberation?
Let’s not pay any attention to losers and instead go over some cool projects working on encryption, finance, and governance. You’ll also get some ramblings about various related subjects
Builders, forge ahead towards a better world →→→ 🛠
Cryptology ♾️ ♉️
Cryptography is the pillar of cypherpunk. Less fun than monkey jpegs, but infinitely more important. What can lazily be described as ✨magic✨ can also be accessibly explained by technical writers like stu.
I should’ve have taken at least one abstract algebra class in undergrad cuz even with a bachelors in math I have trouble grasping some of the basics here
Cryptography education has a long way to go. Where does the role of “trust” and “belief” come in play with purported “trustless systems”?
Billions of people use the internet to view the news and purchase goods yet only a fraction understand how the underlying TCP/IP or encryption works. If building trustless technology requires users to trust your math, is it still trustless?
Regardless, I won’t be going overboard with details on which elliptic curves protocols use and focus mainly on implementations and potential usecases ☐
Entropy 🦋
Imagine a world where Digital Native Asset ownership is decentralized, trustless, and entirely in your control –– you may designate trusted persons to spend funds on your behalf, condition your public goods donations on certain project requirements, and coordinate onchain DAO action with minimal friction –– all with full safety guarantee*.*
If Ethereum’s Externally Owned Account (🌈/🦊) can be considered a 1-of-1 account, then Entropy further distributes that custody over t accounts; “Trustless and secure crypto custody for everyone”
“Sort of like multi-factor authentication for your keys”
- Tux, their founder, at her recent ETHDenver talk
Seed phrase no longer exist, wallet hacks are a forgotten past, and funds have stronger safety protections than current banks and credit cards. Entropy’s new Substrate-based L1 can integrate into any other chains signing API to provide custody services.
Why do we need this?
Hot wallets are vulnerable to phishing, malicious spending approvals, or device theft. Cold wallets alleviate most security concerns but the user experience is cumbersome enough that I hit the browser extension raw.
Further, custodial solutions like coinbase custody or fireblocks rely on trusting centralized institutions –– not your keys, and therefore not your funds.
A successful release for Entropy won’t just mean better UX and safer avenues for asset custody ––
It could become the standard for all cross-chain interactions
Instead of having a smattering of wallets for each chain you want to play with, wallets would integrate Entropy’s signing API and instantly connect disparate networks.
How is this accomplished?
Entropy uses t-of-t threshold Elliptic Curve Digital Signature Algorithm (ECDSA): your private key is split into t nodes across a network, and consensus is required from all parties before any transaction is executed. The splitting is done through Distributed Key Generation (DKG).
They’re focused on getting out documentation for their SDK, with a pink paper coming out afterwards. An incentivized testnet is also in the works. Soon after the testnet they’ll be ready for mainnet, after which they’ll release Multi-factor authentication via a mobile app 🤯.
DAO Custody, Social Recovery, and more will follow after that.
For the sake of christ please stop asking wen token in their discord. Literally just look at their book and wait patiently for a Bit.
What does this unlock?
If they successfully eliminate seed phrases, maybe the apes can keep their funds safe lmeow
For real tho, they promise it all: social recovery, spending limits, full fund safety even with a compromised network.
The way I understand it, your Substrate based key will govern constraints, restrictions, and be able to program actions performed on other chains. This key should be held by a Chief Information Security Officer or a separate multisig. Then, entropy shards can be distributed by this Sub key and held by which every users are designated. In a social recovery example, your Sub key send say 6 shards to different places (computer, phone, and 4 friends/family) and designate them as recovery keys only, meaning they can only transfer account ownership (if say 5/6 shards reach consensus).
You can also program your master Substrate key to require a 2 day waiting period before any new constraints can be added, that way even a comprised Substrate key won’t immediately affect you and you’ll have time to transfer your funds out if a malicious transaction attempts to go through.
“This sounds like a complicated multisig?”. A chain agnostic, infinitely customizable, cryptography based multisig that also acts as a cold wallet, spending guardian, and accountability tracker.
Instead of DAO’s needing to constantly herd multisig signature for any minor transaction, you can condition signing rights to group members based on different criteria like Govrn Points or Pod memberships.
Ultimately their vibes are immaculate, I’m a femboycap simp, and they just raised a $25 Million round led by everyone’s favorite NIMBY-conehead-in-chief, so I think they’re gonna do great things. If correctly executed, Entropy could become a Wallet Hyperstructure ☐
Proof of Stake 🐼 🛹
Are 🐼 you 🐼 ready 🐼 for 🐼 the 🐼 Merge 🐼 anon 🐼 ?
I always hated how school would teach you a concept, only to revise it years later, so let’s be clear from the start: Proof-of-Stake (PoS) is a Sybil Resistance mechanism used to determine block authors, not a consensus mechanism (which requires an additional chain selection rule in the event of a fork). I think this article is the clearest, most straightforward intro to Blockchain Consensus. The paper on PBFT is quite good.
The idea behind Sybil Resistance protocols is one you can see for yourself with the simulation at the end of this game theory website: for repeat p2p games, a modest reward for cooperation and a severe punishment for defecting results in longterm honest behavior. Traditional PoS systems achieve this through staking rewards (fees paid to validators and delegators for each successful block proposal) and slashing (having your collateral removed as a result of dishonest proposals). For an impeccable summary of Ethereum’s Proof of Stake transition along with decision rationales, Kernel has a great page here
For more depth, daddy vitamin is the go to (it’s a bit of a slog honestly, just skim it to get the essentials. no shame). PoS relies on the interplay between validators (machines run by individuals that store data, perform computation, and propose new blocks to be added) and delegators (individuals that provide validators with collateral to secure the network and share the upside of staking rewards). The act of delegating your tokens (or stake) is referred as staking or bonding ☐
Penumbra 🌘
Pinks and reds shimmer on the clouds streaking across the sky; a light crests over the mountain peaks opposite the setting sun. As you stare the light materializes slowly as the radiant SuperMoon reveals herself to the world. For an instant the world is caught between movements –– the secure warmth of the day, et la liberté du pénombre. Le monde n’existe pas dans un environment ou l’autre… ils coexistent simultanement.
Penumbra is building a
“fully shielded layer-1 network within the Cosmos ecosystem.
Penumbra brings privacy to proof-of-stake, allowing users to transact, stake, swap, and marketmake without disclosing their personal information, account activity, or trading strategies to the entire world – while still permitting selective disclosure to appropriate parties”.
Given the increase of blockchain usage for everyday activities, users’ expectation of privacy becomes an important concern. Penumbra is building with this is mind, as well as convenience and ease of use.
Henry, founder of Penumbra Labs, previously worked on Zcash, a separate Bitcoin based privacy coin built using “zero knowledge Succinct Non-Interactive Arguments of Knowledge” (zk-SNARKs). He’s also worked on other stuff I don’t understand, like Ristretto, and is an overall cryptography gigachad. It comes as no surprise then that certain aspects of the cryptographic protocol are inspired from Zcash itself.
ZSwap 🤐
Constant Function Market Makers (CFMMs) behave like a train that never stops. At every station the doors open and passengers are expected to throw themselves off and fling onto the train. And anytime you get on you must announce what your stop is and how much money you’re carrying, which gets broadcast to pickpockets waiting for you to arrive dazed and ripe for the picking. Except the train conductor is also in on this, and can help their friends by placing advantageous jump pads and slowing down certain cars.
Maximal Extractable Value (MEV) degrades the user experience through arbitrage, frontrunning, and sandwiching due to 2 problems:
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Trades are performed continuously in a discrete system –– swaps prices are calculated when they are requested, but blocks are only added in specific time increments. Orders are then dependent on miner’s ordering
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Trades are performed in the open –– swap amounts and directions are broadcast ahead of time, giving other actors time to manipulate trades with all available information
ZSwap effectively stops the train at each station, allowing one contained (discrete) on <> off motion; your destination information is also protected
This is achieved through additive homomorphic encryption, where all swap requests are privately added together, only the aggregate amount is decrypted, and performed in one batch against the Automated Market Maker (AMM).
Users burn (destroy) the original assets, and in exchange receive a swapNFT containing details on the quantity of their original asset, the asset they wish to trade it for, as well as proof that they are the originator of the original request.
In a subsequent block, once the aggregate trade has been executed, you can redeem of your swapNFT which again creates (mints) new tokens of the desired type.
Shielded Staking 🛡
Staking behaves like a lottery, where your chance of winning is proportional to percentage of your capital that makes up the pool. If you’ve contributed 10% of a network’s stake, you have a 10% chance every block of being selected as the block author and receiving the staking reward. Unfortunately this requires keeping track of the quantity of your stake as well as it’s duration.
Penumbra replaces immediate staking rewards with a base reward rate for bonded stake, paid out once tokens are unbonded
This is done by decoupling stake into two separate tokens: PEN represents unbonded stake, while dPEN represents delegated stake. Whereas you’d traditionally receive staking rewards after each new block, in this case your gain (or loss) is realized in a lump sum when dPEN is converted back to PEN.
In lieu of stating your name and providing collateral to enter a lottery, it’s like buying a treasury bill that pays out an interest rate based on the security of the network.
You can checkout the details in their docs, but (this much I can say) the math checks out
This base reward rate for bonded stake, r, is determined by governance. Given the wide spectrum of governance mechanism that exist, along with the questionable validity of token based one, this’ll be a fascinating design space to arise from Penumbra.
There’s also a consideration of liquidity compensation, where liquidity providers for swaps are rewarded with a portion of staking rewards, proportional to the efficiency of their liquidity allocation.
$4.75 Million Seed round from bigbrained funds like Robot and Figment, stacked cryprography team, with steady remarkable progress.
Lunar Roots 🌌🍄, Solar Dreams 🌅💭
A tension exists between lunarpunks –– focused on building antifragile, freedom-maximizing technology –– and solarpunks –– eternal optimists who wholly believe in their fellow human. At times, some even describe this as a war. What could possibly be further from the truth?! This dichotomy shouldn’t be a fracture –– these ideas are not mutually exclusive. Solarpunk requires lunarpunk technology; lunarpunks require solarpunk optimism. I deeply disagree with the article above: solarpunks do not integrate surveillance or seek to oppress. All solarpunk ideology is consent-based. If power is fairly distributed, verifiable, and consensual, why shouldn’t we create systems that hold us mutually-accountable.